What is Skills policy and what has it got to do with university-business collaboration?

What is Skills policy and what has it got to do with university-business collaboration?


The government has set its priority on improving UK productivity1 and this has wide reaching impact for universities and businesses in the area of skills.

HEFCE’s long-standing support for subjects of economic importance includes funding for high cost subjects and tailored programmes to encourage the maths, languages, and quantitative skills that employers require.

In order to become more productive over the next decade there is consensus that businesses will need a steady supply of people with higher skills and also people with higher skills that are not necessarily degree level2.

In terms of graduate talent, since the introduction of fees, universities in England have made unprecedented investment in employability services for students and employers. A great deal is being done inside providers of Higher Education to help prepare students for the world of work and to engage with employers who wish to recruit graduates. One of the ways we can measure this is the upward shift in the percentage of graduates in work or further study six months after graduation between 2010-11 and 2013-143. In the same period, the numbers of undergraduates enrolling on sandwich courses increased by more than 15%.

Despite this positive momentum across the HE sector, employers report a worsening picture of skills gaps with 1 in 4 firms reporting skills shortage vacancies4, and 1 in 3 vacancies unfilled in micro-organisations5. Although the current economic climate undoubtedly affects these trends, the Productivity Plan ‘Fixing the Foundations: Creating a More Prosperous Nation’ points to deep, structural flaws in the UK economy that continue to affect the availability of skills, which will undermine attempts to boost productivity if they are not tackled. The UKCES explains the issue well:

Skills shortage vacancies show up a mismatch between the supply and demand for skills, and where they occur they make it harder for employers to introduce new products or services, or adapt with new working practices. In short, they act as potential brakes on the organisation’s growth - and economic growth overall6.


A shortage of people with higher level skills for engineering and digital jobs is a headache for many firms, and to produce extra graduates with these skills, HEFCE has released a fund for universities who will pilot engineering conversion courses.

Funded courses will enable 1,500 graduates from non-engineering backgrounds to transition into jobs within the engineering and computer-science professions, and it is also hoped that this will attract more women into these careers. 28 Higher Education Providers are using the fund to offer new courses including Cyber Security, Medical Technology, Water Science, Rail and Transport Engineering and Data Science.

HEFCE has been working to address skills gaps in STEM since 2005. Two independent reviews arising from the science and innovation strategy now examine the employability of STEM graduates and the role played by accreditation in improving their work readiness. The reviews take two different standpoints: the Shadbolt Review unpacks the factors leading to comparatively poor graduate employment outcomes for Computer Science graduates despite high employer demand; and the Wakeham Review scans the wider STEM landscape for other subjects facing issues with the pipeline of suitably skilled graduates7.

We hope the National Centre for Universities and Business will work with us to implement the review recommendations on work experience and encourage smaller organisations to offer opportunities.


Meanwhile, government announced their “flagship commitment to skills” of 3 million apprentice starts, and this includes new forms of apprenticeships at higher levels8. A manifesto pledge, the policy not only puts employers in the driving seat for designing new courses through the Trailblazer programme, but also introduces a levy as the means to pay for training the future workforce. 40% of new Apprenticeship Standards are at the higher levels of 4-7 demonstrating clear employer demand for higher skills.

The apprenticeship levy will activate in April 2017 and is likely to spark behavioural change around talent and recruitment strategies and incentivise demand for new apprenticeship products. Some employers have gained a head-start, taking advantage of funding incentives and Trailblazer groups to innovate with new forms of work-based learning. These early adopters are creating exciting new partnerships with universities and, together, are laying the foundations for an upsurge in demand when the levy comes into force.

HEFCE’s role is to represent the interests of students, universities and businesses at the higher skills end of the apprenticeships agenda and we are working in three main ways:

  • Providing practical support and advice for navigating this new territory (UVAC example below).
  • Giving a strong voice to HE and employers, communicating developments and building understanding.
  • Identifying and removing barriers to participation; working in partnership with the Department for Business Innovation and Skills, and the Skills Funding Agency (SFA) to design the new apprenticeship infrastructure.
The National Centre for Universities and Business is proving a valuable partner for HEFCE by bringing together business leaders and Vice-Chancellors to shape the debate on HE reforms and the challenges of implementing workable solutions to policy initiatives such as degree apprenticeships.

HEFCE-4-SORCase Study: University Vocational Awards Council (UVAC)

UVAC is a not-for-profit organisation set up in 1999 by the higher and further education sector. They provide an independent voice for members on matters relating to higher level vocational learning. They have a membership of approximately 60, including universities, colleges, awarding bodies, overseas institutions, Sector Skills Councils and individuals.HEFCE-SOR-FINAL

“Degree Apprenticeships are new products for HE providers and for employers. We think UVAC is ideally placed to provide independent expert advice on all aspects of the developing agenda. HEFCE funding is enabling them to offer practical advice to any provider who is interested in getting one of these courses off the ground and ongoing support to those who are preparing to deliver. For example working with the SFA is a new experience for universities so UVAC produced a Roadmap to explain key SFA processes and rules. They have visited more than 40 providers to help them get started and 63% of the HEIs with SFA funding allocations have been on the receiving end of their help.” Nicola Turner, Head of Skills, HEFCE.

1 HM Treasury (2015). Fixing the foundations: creating a more prosperous nation.
2 Universities UK (2015). Supply and demand for higher-level skills.
3 HESA, The Destinations of Leavers from Higher Education (DLHE), charts 26 and 27 from 2010-11 and 2013-14 respectively.
4 UK Commission for Employment and Skills (2015). Employer Skills Survey 2015: UK results.
5 Footnote 2.
6 https://ukces.blog.gov.uk/2016/01/29/ukces-explains-skills-shortage-vacancies
7 Publication expected w/c 21st March 2016.
8 HM Treasury. Spending review and autumn statement 2015. 

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